Compulsory Patent Licensing in the Time of COVID-19: Views from the United States, Canada, and Europe

• Author: Abbas Kassam, Matt Norwood, Ute Pfaller, Charles F. Hauff Jr., Jeffrey D. Morton
• Pages: 30-62

Published in Landslide® magazine, Volume 13, Number 2, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2020 by the American Bar Association. Reproduced with permission. All rights reserved.

This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

30 LANDSLIDE n November/December 2020

By Abbas Kassam, Matt Norwood, Ute Pfaller,

Charles F. Hauff Jr., and Jeffrey D. Morton

Compulsory

Patent

Licensing

in the Time of

COVID-19

Views from the

United States, Canada,

and Europe

Image: Yulia Shaihudinova, GettyImages

Published in Landslide® magazine, Volume 13, Number 2, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2020 by the American Bar Association. Reproduced with permission. All rights reserved.

This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

November/December 2020 n LANDSLIDE 31

Abbas Kassam is a lawyer at Ridout & Maybee LLP in Toronto, Canada,

where he focuses his practice on intellectual property litigation, licensing,

and privacy matters. He can be reached at akassam@ridoutmaybee.com.

Matt Norwood is a partner at Ridout & Maybee LLP in Toronto, Canada,

where his practice focuses on patent prosecution and intellectual property

litigation. He can be reached at mnorwood@ridoutmaybee.com.

Ute Pfaller is an attorney at law at Withers & Rogers LLP in Munich,

Germany, where she focuses on trademarks, licensing, and patent and

trademark litigation. She can be reached at upfaller@withersrogers.com.

Charles F. Hauff Jr. is a partner in Snell & Wilmer LLP’s Phoenix ofce,

where he concentrates on intellectual property counseling, prosecution,

litigation, and licensing. He can be reached at chauff@swlaw.com.

Jeffrey D. Morton is a partner in Snell & Wilmer LLP’s San Diego and

Phoenix ofces, where he serves as external intellectual property counsel

to companies around the world. He can be reached at jmorton@swlaw.com.

Published in Landslide® magazine, Volume 13, Number 2, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2020 by the American Bar Association. Reproduced with permission. All rights reserved.

This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

T

he COVID-19 pandemic that has impacted

the world over the past half year has raised

a myriad of legal questions in all aspects

of our daily lives. The eventual develop-

ment of a suitable vaccine, which will

likely be the subject of patent protection in

the U.S. and abroad, has run into a theo-

retical conict with the possibility that the

supply of the vaccine might be unable to

keep up with the demand.

As a backdrop to this conict, the grant-

ing of a patent provides a patent owner with

the legal right to sue other parties from

making, using, selling, or importing the pat-

ented subject matter. Compulsory patent licensing is generally

understood to refer to situations where another entity—upon

meeting certain criteria—can nevertheless make, use, sell, or

import the patented subject matter without obtaining the patent

owner’s permission. Examples of conditions that may warrant

an award of a compulsory license include national emergency

or extreme urgency where the invention serves vital public

health needs, or where a patent owner has abused its economic

power in violation of antitrust laws. In the case of COVID-19

vaccines, there has been speculation about a potential role for

compulsory patent licensing if a vaccine is invented and pat-

ented but supply cannot keep up with demand. While there are

potentially many factors (e.g., supply chain disruption) that

could cause a vaccine supply shortfall, any patent rights per-

ceived to contribute to that shortfall would likely give rise to

interest in compulsory licensing.

This article reviews the current state of compulsory patent

licensing in three key patent jurisdictions: the United States,

Canada, and Europe, three jurisdictions that are signicantly

involved in the development of COVID-19 vaccines.

United States

Unlike the patent statutes of many other nations, U.S. patent

law does not include a general compulsory licensing provi-

sion. However, other domestic laws include provisions that

allow for compulsory licensing of patented inventions. For

example, the Atomic Energy Act,1 Clean Air Act,2 and Plant

Variety Protection Act3 provide for compulsory licensing.

However, these provisions rarely have been used.

Additionally, the Bayh-Dole Act4 offers the federal gov-

ernment a narrower set of rights, termed “march-in rights,” in

respect of federally funded inventions. March-in rights come

with several restrictions, including that the government may

only use such rights if the patented invention was developed

using federal funding. To date, no administration has made use

of the march-in rights afforded to it by the Bayh-Dole Act.

Compulsory licenses also exist in a nonlegislative context.

Under U.S. antitrust law, compulsory licenses occasionally have

been awarded as a remedy for antitrust violations. In the patent liti-

gation context, a court may decline to award an injunction in favor

of a prevailing patent owner during infringement litigation, an out-

come that is somewhat akin to the grant of a compulsory license.

Internationally, the U.S., like Canada and the countries

of Europe, is a signatory to the Paris Convention for the

Protection of Industrial Property (Paris Convention). The

Paris Convention provides that its member states have the

right to take legislative measures providing for the grant of

compulsory licenses to prevent the abuses which might result

from the exercise of the exclusive rights conferred by the

patent, for example, failure to work. In addition, the U.S. is

a signatory to the Agreement on Trade-Related Aspects of

Intellectual Property Rights (TRIPS Agreement). Article 31

of the TRIPS Agreement restricts the issuance of compul-

sory licenses by requiring that the applicant must have made

efforts to obtain authorization from the patent owner on rea-

sonable commercial terms and conditions; the scope and

duration of the compulsory license is limited, nonexclusive,

and revocable; and the patent owner is adequately compen-

sated. Against the backdrop of these international agreements,

and as mentioned above, the U.S. federal patent law does not

provide for a general compulsory licensing scheme.

In a non-country-specic manner, several relevant initia-

tives have been launched to ght the COVID-19 pandemic. For

example, the “Open COVID Pledge” states: “It is a practical

and moral imperative that every tool we have at our disposal be

applied to develop and deploy technologies on a massive scale

without impediment. We therefore pledge to make our intel-

lectual property available free of charge for use in ending the

COVID-19 pandemic and minimizing the impact of the dis-

ease.”5 To make the pledge, individuals, companies, and other

organizations that hold intellectual property rights must pub-

licly commit to making their intellectual property assets freely

available to ght the pandemic, and implement the pledge via

a license falling within certain open license specications.6 An

open license provides royalty-free use.

Finally, with an added focus on global cooperation in the

race for a COVID-19 vaccine, efforts to enforce patents during

the current pandemic have given rise to negative public reac-

tion, which has signicantly impacted enforcement actions. For

example, Labrador Diagnostics brought suit against BioFire

Diagnostics and its parent company bioMérieux S.A., alleg-

ing that two patents acquired by Labrador were infringed by

bioMérieux’s launch of certain COVID-19 tests.7 Due to the

public outcry against the lawsuit, eight days after ling the

lawsuit, Labrador announced the grant of royalty-free licenses

to third parties to use its patented technologies for COVID-19

tests. As such, and in this instance, it was the negative public

outcry that effectively resulted in a compulsory patent license.

Canada

Canada has adopted a more direct federal response to the

COVID-19 pandemic as it relates to compulsory patent licens-

ing. In March 2020, the Canadian government passed the

COVID-19 Emergency Response Act (Bill C-13), which intro-

duced provisions to the Canadian Patent Act that expand the

government’s ability to procure patented inventions—including

medicines and medical devices—in response to the COVID-19

crisis. While Canada’s Patent Act already contemplated limited

compulsory licensing,8 the new provisions allow a time-limited

compulsory license of patent rights even where the patentee is

able to satisfy demand for its patented invention.9 However, the

authors suggest it is unlikely that the new provisions will be